bman
New Member
Joined: Apr 4, 2012 10:52:04 GMT -5
Posts: 6
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Post by bman on Jan 24, 2011 9:02:15 GMT -5
I heard the most ridiculous commercial on the radio this morning. It was trying to get people to refinance their mortgages with a particular mortgage originator. It was one of those advertisements where they pay the D.J.'s / morning talk people to discuss the product favorably and pretend like what they are doing is not really a commercial.
Anyways, this ad warned people of the dreaded "dead equity". By "dead equity", they basically meant any equity in your house that is just sitting there going to waste when it could be used to purchase something. They would say "dead equity" in this ominous tone, as if having equity in your house was some horrible thing we should all be afraid of. At the end of the commercial, they reminded everyone to call this mortgage company to cash out their "dead equity".
I was surprised to hear a commercial like this post mortgage crisis! I just shook my head, laughed, and said to myself "Unbelievable, are people really that stupid?" Anyone else heard any ads like this or others that are so absurd?
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Deleted
Joined: May 6, 2024 0:50:52 GMT -5
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Post by Deleted on Jan 24, 2011 9:54:43 GMT -5
I look at it this way: If the consumer is dumb enough to take that advice and take their equity out of the home without doing their due diligence, then good for that company.
No offense, but it's not the "FOR PROFIT" company's job to make sure you can pay your bills. It's their job to make money.
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Deleted
Joined: May 6, 2024 0:50:52 GMT -5
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Post by Deleted on Jan 24, 2011 10:09:10 GMT -5
Well just to play devil's advocate, I'll argue that they could be right.
With mortgage rates being historically low and reviewing the long term rate of return of the stock market, many folks with a long term investment horizon would be better off having a cheap 30 year mortgage and keeping money invested a broad based mutual fund invested in the stock market than relying on the appreciation of a single house. Where's Phil to answer this question? ;D
All bets are off though if someone "invests" that money in TVs, cars and other depreciating assets!
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Deleted
Joined: May 6, 2024 0:50:52 GMT -5
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Post by Deleted on Jan 24, 2011 10:26:43 GMT -5
I thought we learned our lessons about using your house as an ATM.
And, while you may think it's an individual's right to make stupid decisions, look how dearly we all paid for those stupid decisions a couple of years ago. Government-financed bailouts, write-off of massive losses on corporate taxes (another way for taxpayers to get stuck with part of the bills), being stuck in a home with negative equity even when you yourself were being responsible and paying your mortgage every month.
I hope that company goes out of business. Soon.
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cronewitch
Junior Associate
Joined: Dec 20, 2010 21:44:20 GMT -5
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Post by cronewitch on Jan 24, 2011 10:59:28 GMT -5
I hate all ads targeting the stupid telling them they are smart. Car sales with customers bragging they had credit so bad nobody else would sell them a car and look now they have a SUV. Payday lenders with customers saying how it was so smart to borrow for a short term need or people selling gold for $400 for a handful of gold.
Personally I like to use my house as an ATM but I pick the lender, have good credit and get good rates then invest the money not spend it. I owe more now than I paid for the house in 1992 but I am not sorry at all. My highest interest rate is 3.458% and I have used my equity to buy mutual funds, car, truck, boat and other things so I didn't need to pay higher rates. I still have equity and mutual funds and my mortgage is only $646.17 a month.
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thyme4change
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Joined: Dec 26, 2010 13:54:08 GMT -5
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Post by thyme4change on Jan 24, 2011 11:56:41 GMT -5
I guess now there is risk to dead equity. Anyone who took out $100k and now does a short-sale probably will just be one of the crowd. I know we like to think that their credit score is ruined forever - but I just don't think that is true. I think it will dip, and recover. Even if a future employer goes back 5 years, I bet that such a large percentage of people will walk away from their house during this - either through short-sale or foreclosure - that it just won't the dreaded scarlet letter we are hoping it was. I could have cashed out my equity a couple years ago, walked away from my house and purchased another house for cash! I missed a golden opportunity.
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thyme4change
Community Leader
Joined: Dec 26, 2010 13:54:08 GMT -5
Posts: 40,413
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Post by thyme4change on Jan 24, 2011 11:57:16 GMT -5
But, yes, I'm surprised to hear that kind of ad now. You would think anyone stupid enough to fall for that already took out their equity and is now underwater.
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